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As the majority of Canadians are now spending much more than they make, their debt levels are reaching crisis proportions. Excluding mortgage debt, the average Canadian owes over $25,000 in consumer debt, which poses massive risks not only for the individuals carrying that financial load, but for our entire financial system. In Crushing Debt, bestselling author David Trahair (Enough Bull) warns Canadians that consumer debt is becoming an urgent problem but one that can be solved. Trahair clearly outlines the evils of debt and how easy it is for debt to spiral out of control with examples of real-life stories of debt disasters. If you are a Canadian who is already struggling with debt, Crushing Debt will motivate you to face your financial problems and will show you step-by-step the most appropriate solution to getting out of your personal debt hell. Filled with proven advice, Crushing Debt is a call to action on an urgent and debilitating problem for far too many Canadians.
Auteur
David Trahair is a Chartered Accountant, speaker and author. He currently operates his own public accounting firm and gives seminars on his books to CAs in B.C., Alberta, Saskatchewan, Manitoba and Ontario. He frequently appears in the media, contributes regularly to financial publications, and is the author of several books, including the bestsellers Enough Bull and Smoke and Mirrors. He was also a director of Credit Canada, a non-profit organization dedicated to helping people deal with credit problems, for six years. www.trahair.com
Texte du rabat
DEBT is everyone's problem. If you're an average Canadian, you've got about $24,000 worth of consumer debt, making only minimum payments is the norm and you consistently spend more than you make. You probably don't even know how poorly you're really doing. And yet you're still being offered more easy credit. Even if you think you're doing alright, there's more to debt than just the personal cost. Debt is stressful. It can be embarrassing. And the consequences can be devastating.
Canadians are intrinsically linked to their financial institutions. Banks make a lot of money based on people's debt, and the longer personal debt lasts, the more money banks make. But if too many people get in too deep and default on their debts, the banks will default on their obligations as well. And if the banks default, it becomes the deeply-indebted government's problem to bail out the institutions. And that means it's a problem for everyone. What currently exists is a storm cloud of debt that will be hanging over future Canadians for generations, and we, as individuals and as a nation, need to take control immediately and start living within our means.
In Crushing Debt, author and educator David Trahair guides readers through the problems with debt, how different kinds of debt relate to each other, the traps many people fall into, and how to identify and solve any personal debt problems. With the world's economy in such a mess, getting debt-free is the best defensive strategy you can use. Taking care of your finances now by getting rid of your debt will allow you to protect what you have and build for the future.
Is debt scary? Undeniably. But it's time for Canadians to face their fears and crush their debts.
Contenu
Acknowledgements ix
Introduction 1
Where I am Coming From 2
A Word about Books 3
The World is on the Edge of a Cliff 4
It Ain't Gonna be Easy, But There is Hope 5
Why I Wrote This Book 6
What You Will Learn 7
Chapter 1Debt: The Snake in the Closet 10
My Own Story 10
Marie's Story 12
Chapter 2Why is the Consumer Debt Crisis So Bad? 16
Human Nature 16
The Environment 20
A Financially Illiterate Consumer is a Bank's Best Customer 24
Consumer Financial Education: Why is It Missing? 24
Look at What Happened in the United States 25
Chapter 3The U.S. Subprime Mortgage Disaster 26
The Perfect Debt Storm 27
My Trip to Slavic Village, Cleveland, Ohio 28
Why the Crisis Spread 30
Houses "Under Water" 31
The Current U.S. Consumer Debt Situation 32
Could the U.S. Subprime Mortgage Crisis Come to Canada? 34
Chapter 4Canada's Government Debt 37
Canada's Debt 38
Accumulated Versus Annual Defi cits 40
You Say "Deficit," I Say "Loss" 40
How Big is Canada's Debt? 41
Canada's Annual Defi cit History 41
Federal Debt or Accumulated Deficits 42
Future Federal Debt Projections 42
Ratio of Federal Debt to Gross Domestic Product 45
A Word about Provincial and Territorial Accumulated Deficits 46
Canada's Debt versus the Rest of the World 47
Debt to GDP May be a Misleading Measure 48
MGI's Five-Part Framework to Assess the Sustainability of Leverage 49
A Personal Health Check 50
A Health Check of Canada 50
One More Measure: Canada's Debt Per Capita 54
What's It Like to be Bailed Out 55
Perpetual Government Defi cits 56
Is a Foreign Government Default Inevitable? 56
What We Need to Do Now 58
Chapter 5Canada's Big Six Chartered Banks 59
Why are They So Worried about Household Debt? 61
An Analysis of the Big Six Canadian Chartered Banks 62
How Much Debt Do the Banks Themselves Have? 66
For A Bank, A Billion Dollar Profi t is Peanuts 66
Return On EquityA Good Measure? 68
What about the Debt-To-Equity Ratio? 69
Why Debt is more Popular Than Equity 70
Did Canadian Banks Get a Bailout? 71
CMHC Financial Situation 73
Conclusion 74
Chapter 6Canadian Household Debt Levels 76
Canadian Average Debt Levels 77
The Line of Credit Trap 79
Been There, Done That 79
Chapter 7How to Get Out of Personal Debt 81
It's the Principal of the Matter 82
Canadians' Love Affair With Debt 83
The Options to Crush Your Debt 86
Paying Off Your Debts Yourself 86
Are You a Spender or a Saver? 91
Would You Like to Earn $100 by Staying at Home and Watching TV? 91
Credit Counselling: Debt Management Program (DMP) 92
Shirley's DMP Success Story 94
Consumer Proposal 97
Bankruptcy 98
Choosing Which Route to Take 102
Chapter 8Your Credit Score 109
What is a Credit Score? 109
How to Find Out Your Credit Score 109
The Credit Reporting System is not Perfect 111
Your FICO Credit Score 111
What Determines Your FICO Credit Score 112
What Your FICO Score Ignores 115
Individual Credit Ratings 115
Warning: The Following Information Could be Dangerous 116
Credit Score Secrets You Need to Know 117
A Good Credit Score Can Save You Big Money 121
Wrap-Up 121
Chapter 9Gaining Control Over Your Money 123
How to Track Your Spending and Find the Fat 123
Analyzing Your Spending Results 132 How Much Do Yo...